Like other large scale industries, the truck driving and transport industry depends on reliable equipment that gets the job done. For a trucking company or an owner-driver to succeed, they must invest in solid gear and a dependable vehicle that can safely and efficiently move loads. Those just getting started or seeking to upgrade their equipment must often turn to truck finance to fund this significant purchase. The investment is certainly worth it—as having the proper trucking equipment can help ensure business success—but it is vital to obtain the right type of financing.
How can you ensure you don’t fall into the truck finance traps? Read on for some essential tips on getting the truck finance you deserve.
Know your financial situation inside out
Before seeking out a loan or freight bill factoring of any kind, spend some time delving into the state of your own finances. Being armed with all possible knowledge of your assets, credit rating, and earning potential will aid you in identifying those finance solutions which are most feasible. Knowing your financial situation also guards you against the bewilderment and confusion that can arise when dealing with financing, leading to the easy trap of agreeing to a high interest loan or one with unfavourable terms.
Look Around
With your financial circumstances clear in your head, it’s time to find out what’s out there. One of the biggest truck finance traps involves opting for the first loan option you see or hear about. This may not be a bad package, but you won’t know unless you give yourself time to research and discover what else is out there. Don’t dive into a big decision like truck finance without gathering all possible information first, and remember that finance providers affiliated with banks often operate in their best interests rather than yours. One thing to be wary of in the shopping process is making actual applications before you’re happy with quoted rates and repayments, which can negatively impact on your credit score if done multiple times.
Consider what trucking equipment you plan to buy.
It’s worth investigating your potential truck purchase to help you make a more informed loan decision. Older trucks will generally be less expensive, but the interest rates on such equipment will likely vary accordingly. A lender may also require an increased deposit for an older truck, and shorter repayment terms (resulting in higher repayments) may be all that’s on offer to you if you have your heart set on an older truck. Understanding what you’re shopping for can help you to narrow down the truck finance options. This is also why it’s important to work with a finance broker who can access many loan choices on your behalf (ideally from multiple lending institutions).
Beware some rent-to-own offers
A rent-to-own opportunity can seem like a great way to make payments on a truck or other equipment and eventually own the item outright. However, some of these offers can be a bit of a trap, leading to excessive payments over the life of the term. You could end up paying thousands of dollars above and beyond the cost of a more mainstream lending option. Always read the fine print when entering into any sort of rent-to-own agreement, and be aware that better truck finance options are out there.
Choose a reputable truck finance provider
There are many banks, lenders, Freight Factoring company and brokers offering financial products. Who can you trust? For your truck financing, make sure you select a provider who has a solid reputation for honest, exceptional service. An objective truck finance company with many years of experience is always a good sign, especially one who is not linked directly to any single bank. This gives you the opportunity be matched with the right financing solution that meets your individual needs. With truck finance, this is especially important.
By sticking with the tips above, you can avoid the common truck finance traps that leave many drivers high and dry, and be well on your way to a lucrative trucking career.